Monday, June 27, 2011

Limits of Tax Cuts

Harry Graver looks at some state-by-state unemployment numbers and finds that low taxes are not the only factor for economic growth:
For example, Nevada, leading the nation in unemployment, has the fourth best tax environment, according to the Tax Foundation. Of the states without an income tax (nine in total), six have lower unemployment than the national average (Alaska, New Hampshire, South Dakota, Texas, Wyoming), two are roughly keeping the national average (Tennessee and Washington) and two are above (Florida and Nevada). Of the seven states with a flat income tax, three are at the national average, three are below, and one (Michigan) is above.
As Graver rightly notes, economic growth depends upon a vast range of factors---including human capital, natural resources, infrastructure, and regulatory policies. Pro-growth tax policies can be helpful but they are not sufficient for economic growth.

No comments:

Post a Comment